Greek-style Austerity Measures

Private Sector Must Work with Public as Spending Falls

September 10, 2010

The Scotsman - Business leaders were last night urged to support the public sector in dealing with an "unprecedented" reduction in spending and an inevitable loss of jobs in Scotland.

In a hard-hitting speech to the CBI Scotland annual dinner, chairman Linda Urquhart also said the challenges facing public spending demanded a root and branch review of the number of publicly funded bodies and a questioning of the need for different organisations with similar responsibilities in areas such as economic development.

"Many working in national and local government understand the reality and are thinking the unthinkable," she said.

"And they need our understanding and support as business people to make the radical change necessary to restore equilibrium, although that may take several years."

Urquhart, who is chief executive of law firm Morton Fraser, repeated CBI Scotland's calls for the public sector to use the private sector to help deliver savings and for public authorities to shift to be becoming commissioners of services rather than deliverers.

"If private business can provide services more innovatively, efficiently and cost-effectively, why should it be shunned simply because it is profit-making rather than tax-spending?

"But the opportunities for public-sector reform go much deeper than budget planning; we need less regulation and bureaucracy; We need to get Scotland working better."

Urquhart also stressed the importance of careful spending of reduced budgets.

"While so much focus is on cutting costs, public spending is not coming to a sudden stop. We want the Scottish Government to think carefully about where and how it is spending money; we need investment in the economy, for example in road and rail improvements and we need new private-public finance models that can provide us with essential infrastructure for economic growth."

Referring to the Calman Report, Urquhart reinforced CBI Scotland's opposition to tax changes which "make Scotland a more expensive and less attractive place than the rest of the UK to do business".

She continued: "We are working with the UK government to ensure that its implementation is sensible. We support a devolved 10p income tax rate remaining on a par with the rest of the UK. But we are strongly opposed to any increase which would damage Scotland's tax competitiveness."

Urquhart, addressing the audience of about 700 at the Hilton Hotel in Glasgow, said that the challenges facing Scotland and the UK provided an opportunity to build bridges between the public and private sector.

"Traditionally, the private sector denigrates the public sector and vice versa. The reality is that there is good and bad in both, in terms of people and organisations.

"We need a radical change in this cultural opposition."

She added that the Scottish Parliamentary elections next May were "an extremely important opportunity for Scotland" and called for an intelligent political debate ahead of them.

"CBI Scotland has a duty to challenge rhetoric, superficiality and downright stupidity in matters that impact on the success of business in Scotland, and consequently, the economy of Scotland."